Freelancers, The No. 1 Principle In Making Important Decisions

A helpful article by McKinsey’s Tim Koller and Dan Lovallo talks about an interesting decision flaw that affects all of us on the front lines of the freelance revolution. Call it the over optimism bias. As the behavioral economist Daniel Kahneman observed, “Most of us view the world as more benign than it really is, our own attributes as more favorable than they truly are, and the goals we adopt as more achievable than they are likely to be.”

This is particularly problematic or even dangerous when organizations are contemplating big, complex and unfamiliar decisions and actions. A well-known consequence of the over optimism bias is innovation failure. We know that 70% of change efforts fail, and that a similar percentage of mergers and acquisitions do not succeed in even returning the cost of capital. We also know that while the failure rate for change is stubbornly high, most change efforts have been thoughtfully identified and are “technically” correct. The over optimism bias, if not checked, leads us to under prepare by underestimating obstacles, overstating our readiness or capability, and exaggerating the likelihood of success.

But, while more dramatic in large project contexts, the over optimism bias is just as important to keep in mind for individual freelancers, and for managers of projects where freelancers and internal employees are working together in common cause.

When we belie or ignore the experience and insights of others, or the available data, we fall prey to what social psychologists call an attribution error: believing the odds of success are higher than the facts would suggest, and underestimating the impact of external obstacles on our performance.

For example, as individual freelancers, we often face the quandary of over optimism. When we’re keen to take on an interesting project and ignore the voice in our head that whispers that the budget is insufficient, or that the deadline is too tight. Or, when we bid for work that we aren't quite qualified to do, but believe we can figure it out. Perhaps you’re a team leader about to kick off a project with career make-or-break potential, promising to deliver a blow out success despite worrisome gaps in the team’s skill set and experience. Or you are a tech manager, certain that your tech is unique and leading edge despite challenges by respected others that the differences are not as significant than you fervently believe.

The solution to over optimism is what Kahneman – and Koller and Lovallo – call the outside view. If "where we stand is where we sit," then we must change seats! That means seeing the situation from a perspective that is different from your own, and may sharply disagree with your point of view, as a way to check your bias.

It’s not easy to be “objective”: we’re not wired that way. But, there are problem solving disciplines that help us tap the outside view. Using them will help you to a less biased assessment of the situation and your options, and better road testing of your plans and decisions:

Replace personal experience and bravado with real data. In decision making, we often unconsciously diminish the importance or relevance of others’ experience versus our own past experience and successes. When we intentionally or unconsciously avoid a full review of the situation, we're likely to miss critical facts and under prepare to deal with obstacles that have tripped up others because "we're different." Maybe so, but maybe not. Rather than ignore or discount contrary facts and data, embrace and use them.

Conduct a rigorous potential problem analysis. Esso Resources Canada, the Canadian Exxon Mobil division and my first employer, required every professional to go through Kepner-Tregoe. It was eye opening. The workshop described itself as “rational problem solving” but the decision tool that stood out for all of us was potential problem analysis. This is a simple method of failure-proofing our plans and projects by rigorously identifying and assessing potential problems, and estimating their impact on the success of our work or initiatives. But, it isn’t necessary to take the class: do it yourself! As you prepare for a gig, make a list of all the things that could go wrong, assign a probability, and deal with them to the extent possible in advance.

Be your own critic; take the position of critical others. We too often dismiss critics rather than see their challenge as a valuable resource in decision making. We prefer to convince them of our position, instead of listening fully to why they have a different point of view and using that difference to draw more thoughtful conclusions and make better decisions. Its human to congregate with those who believe what we believe, and like what we like. And, its a problem when we turn off dissenting voices. Instead, seek out those who disagree even when they annoy us, not to persuade them to our point of view but to learn from them. Alternatively, rather than look for data that supports our position, intentionally and sincerely “adopt” the other side of the argument. A quote that someone shared with me recently is particularly relevant: “If you aren’t open to being persuaded, you aren’t listening.”

Own the outcome. The research shows that we tend to overstate our role in successes, and fault others or circumstantial factors when we fail – as freelancers, we might blame the client, the team, other situational aspects. A more effective method is to force ourselves to explicitly consider our contribution to the problems, and the mistakes we made in omission or commission leading to a partial or full blown failure; to borrow Clint Eastwood’s iconic movie title, “the good, bad and ugly.” It’s not easy to do this. One approach is to work with an “honesty coach,” a mentor or colleague who helps us with the analysis, challenges our assertions, and generally “holds our feet to the fire.”

In the next article, we’ll explore an important application of the outside view: lessons learned from MBO Partners’ Chief Client Officer, Linda Mann, on the challenges of successfully implementing a company proprietary online talent platform that combines both internal full-time employees and qualified freelancers. This is a major innovation that, over time, will change how we manage talent by facilitating the flexible blended workforce. But, only if we design, implement and manage it well! Linda is a pioneer of the freelance revolution, one of the few who has been there and done that, and her analysis is important to understand. Watch for it in the next few days.